1993 (10) TMI 17

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... al has referred the following two questions for our opinion : " 1. Whether, on the facts and in the circumstances of the case, an amount of Rs. 63,304 forming part of the gratuity provision which was not considered as allowable deduction while computing the total income would qualify for inclusion in the capital base ? 2. Whether, on the facts and in the circumstances of the case, an amount of R .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... CIT [1981] 132 ITR 559, wherein the court has held that ordinarily an appropriation to gratuity reserve will have to be regarded as a provision made for a contingent liability, for, under a scheme framed by a company, the liability to pay gratuity to its employees on determination of employment arises only when the employment of the employee is determined by death, incapacity, retirement or resign .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ity has considered that the reserve of amount of Rs. 75,000 is for doubtful debts. It is also not disputed that the said amount of Rs. 75,000 is not considered as bad debts and not included in computing the profits for the purpose of the Income-tax Act. That means, the amount is kept as other reserve. These reserves are appropriation of profits and are being retained in the form of capital employe .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X